From Farm to plate — Blockchain technology in Agriculture supply chain
Blockchain has been recognized as a digital ledger technology that promises ubiquitous transactions in real time, among distributed untrusted parties. However, at present, it has consolidated its position in almost every sector of the economy as a transformative revolution. Focusing away from cryptocurrencies and ICOs, industries are looking for various ways to leverage Blockchain technology for creating a more transparent and efficient economy. Blockchain technology is en route to impact the Agriculture supply chain in many unimaginable ways and the results show great potential for a Blockchain-enabled future!
Food and Agriculture Organization of the United Nations in its report states that the food system is highly inefficient. The report also states that around 50% of crop value vanishes between harvesting and the point of sale. Looking at the loopholes tormenting the Agriculture supply chain, Blockchain seems like a savior to incorporate transparency and fault tolerance to solve problems. Especially in scenarios where numerous untrusted actors get involved in the distribution of resources.
Challenges plaguing the Agriculture supply chain
The Agriculture supply chain across the globe consists of small and marginalized farmers, who rely on several middlemen for supplying their product to the agricultural market. This highly fragmented and unorganized agricultural market drastically reduces the profit margin for farmers in underdeveloped and developing countries. The real issue is ‘lack of trust’ due to reliance on paper-based record keeping. Most low-income farmers have low levels of literacy and live in areas with very ineffective or non-existent governance structures. This causes power imbalances, thus increasing the potential for corruption.
Farmers across the globe are in huge need for improved and efficient storage infrastructure. Investment in Logistics is very important to determine the adequate number of cold-chain storage infrastructure required. Tracking and tracing of food products have never been viable and the incidents of food fraud and food contamination are innumerable. According to the estimates of the World Health Organisation (WHO), 1 in 10 people fall ill every year from eating contaminated food, resulting in about 420,000 deaths annually.
To make the supply chain more efficient and transparent, it is very important to remove the dependence on middlemen so that marketers can directly reach the farmers. The decrease in dependence on middlemen would lead to an efficient market mechanism in the economy.
The requirement of the present agriculture supply chain is the complete integration of farmer to the customer, by minimizing the presence of untrusted intermediaries.
Blockchain Technology with its inherent features holds the cure for above-stated inefficiencies of the agricultural supply chain. It holds the potential to completely revamp the relationship between the farmer, supplier, and the consumer. The technology offers ‘trust’ which has been missing in the Agriculture supply chain since its very inception. By the incorporation of Blockchain, customers can directly trace the product from its source farm to the plate.
How Blockchain can benefit Agriculture supply chain?
Blockchain technology provides an ocean of transformative opportunities for improving supply chain efficiency and giving access to finance for smallholder farmers. The global Agriculture supply chain is complex and wreaked with inefficiencies and imprecisions. The present system is highly unreliable as it involves multiple actors, such as farmers, shipping companies, distributors, and groceries. Let us see how lives can be transformed by incorporation of Blockchain technology in Agriculture supply chain?
Increased Traceability in Agriculture supply chain — With the replacement of the centralized record-keeping system with Blockchain in the Agriculture supply chain, we would create an immutable and trust-worthy platform. This decentralized ledger would lead to the elimination of third-parties in the system and improve traceability. A Blockchain-enabled platform would facilitate the tracking of unsafe products back to their source, which can be extremely helpful in preventing illness and reducing the cost of product recalls. This would be extremely helpful for tracking poultry and seafood, which have been scrutinized for lack of transparency in the system.
There are several organizations working towards making Agriculture supply chain more transparent and efficient. IBM started in collaboration with Walmart China and Tsinghua University and now has partnered with many other companies like Dole, Driscoll’s, Kroger, Nestle, Unilever and Tyson to incorporate Blockchain into the Agriculture supply chain.
Ensuring Food safety and security with Blockchain technology in the Agriculture supply chain — Under the situation of extreme crisis like environmental disasters, violent political and ethnic conflicts, etc, Blockchain can be helpful in many ways. This includes transparent delivery of international aid, verification of records and assets, for disintermediating the process of delivery and to respond more efficiently in the wake of humanitarian emergencies.
Companies like Walmart and Kroger are working towards guaranteeing food safety to the customers by embracing Blockchain in its food supply chain. Blockchain along with IoT and digital sensors is being used for real-time monitoring of physical data. ZetoChain is one such initiative which performs environmental monitoring at every link of the cold chain using IoT devices. They notify the parties involved by identification of an issue in real-time. The company has also incorporated smart contracts to increase the safety of sales and deliveries of goods.
Supporting Small-scale farmers and cooperatives — In the traditional system, smallholder farmers have always struggled for access of funds, lack of significant credit histories, land ownership documentation, and other issues make it difficult to access bank loans. Blockchain can be used to provide access to capital to small farmers by creating investment tokens and raising funds for their agricultural businesses. Blockchain technology in Agriculture supply chain can also be used to provide insurance to these rural farmers. Blockchain could help in fairer pricing through the whole Agriculture value chain, thus providing environmental/economic sustainability to smaller farms.
Transforming transactions in Agriculture supply chain — A Blockchain-enabled transaction system would improve profitability for farmers and everyone else associated with the supply chain. Using Blockchain technology, transactions can be processed in real-time to employees, suppliers/ distributors, etc into their local or international bank accounts.
Many startups like BitPesa have made a mark on how transactions are to be done in the most transparent manner.
Conclusion
Though there are many advantages of implementing Blockchain technology in Agriculture supply chain, the true potential needs to be tested. There are numerous challenges blocking the path for wider adoption of Blockchain technology in Agriculture supply chain.
The lack of awareness about Blockchain is a major hurdle. Also, the regular fluctuations in the value of cryptocurrencies make them unreliable. Lack of proper infrastructure to regulate cryptocurrency is also affecting the incorporation of Blockchain technology in Agriculture supply chain. Basically, Blockchain needs to be simpler and more scalable to penetrate deeper into the Agriculture supply chain.
Government investment in research and innovation is very important to harness the full potential of Blockchain technology in Agriculture supply chain. It’ll optimize its competitiveness and ensure sustainability of Agriculture supply chain.
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